The U.S. economy created a far higher-than-expected number of new jobs last month, official data indicated Friday, as the labor market continues to outperform forecasts and stoke inflation concern.
The Labor Department's Bureau of Labor Statistics on Friday reported that 336,000 new jobs were created last month, nearly double the Wall Street consensus forecast of a 170,000 gain and the second largest gain of the year.
Private-payroll gains were pegged at 263,000, the BLS said, although the unemployment rate held at 3.8%, just ahead of the 1969 low of 3.4% recorded earlier this year and the 3.8% figure published in August.
The BLS also revised its August jobs-addition estimate lower, to 227,000 from its original estimate of a 187,000 net gain. It also boosted its July estimate to 236,000 from its prior estimate of 157,000.
The BLS noted that hourly wages were up 0.2% on the month - compared with the 0.2% gain recorded in August and Wall Street's consensus forecast for a 0.3% gain. On an annual basis, wages were up 4.2%, again shy of Wall Street's 4.3% forecast.
U.S. stocks turned lower following the data release, with the Dow Jones Industrial Average sliding 116 points and the S&P 500 retreating 20 points, or 0.48%, in the opening hour of trading. The tech-focused Nasdaq was down 60 points, or around 0.5%.
Benchmark 10-year notes were last pegged at 4.824% in early New York trading, close to the 2007 high of 4.842% from earlier this week, with 2-year notes changing hands at 5.1094%
Benchmark 30-year bonds, the most sensitive to interest rate changes, surged well past 5% to a fresh multi-decade high of 5.045%.
The U.S. dollar index, which tacks the greenback against a basket of six global currencies, was marked 0.36% higher at 106.710.
The CME Group's FedWatch now indicates a 31.3% chance of a 25-basis-point (0.25 percentage point) hike next month month, up from 19% at the close of trading last night. Bets on another rate hike in December accelerated to around 43%.
"Friday's jobs report suggests that the labor market remains very strong and cements the case for an additional Fed rate hike this year, and it also likely delays the pace of eventual rate cuts," said Robert Schein, chief investment officer, Blanke Schein Wealth Management in Palm Desert, California. "Investors will need to get used to the higher for longer narrative on interest rates given the strength of the economy."
Job market data this week has been mixed, with ADP's monthly National Employment Report showing a decline in private sector hiring and muted wage gains for job leavers, while the BLS's weekly estimate of Americans filings new applications for jobless benefits holding near the lowest levels in 8 months.
Other reports, including Challenger Gray & Christmas' monthly tally of overall job cuts, showed September layoffs fell 37% from August to 75,151, taking the third quarter total to around 146,300.
“Employers are grappling with inflation, rate increases, labor issues and consumer demand as we enter Q4,” said Andrew Challenger, labor expert and Senior Vice President of Challenger, Gray & Christmas, Inc.
Labor demand, however, remained robust over the month of August, according to the BLS's monthly Job Openings and Labor Turnover Survey, better known as JOLTS, which showed unfilled positions surging to a much higher-than-expected total of 9.6 million.
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